Donald Trump Calls For 10% Interest Cap On Credit Cards; Experts Warn Of Account Closures And Higher Fees

To mark the first anniversary of his second term, United States President Donald Trump intends to impose a 10 per cent per annum interest rate cap on credit cards for one year beginning on January 20, 2026. However, credit card lenders have not implemented this new change, according to several media reports.

"One of the biggest barriers to saving for a down payment has been surging credit card debt. The profit margin for credit card companies now exceeds 50 per cent. One of the biggest. And they charge Americans interest rates of 28 per cent, 30 per cent, 31 per cent, 32 per cent. Whatever have happened to usury?" Trump said during his speech delivered at the World Economic Forum in Davos, Switzerland on January 21.

"So to help our citizens recover from the Biden disaster, all caused by this horrible, just horrible precedent, I'm asking Congress to cap credit card interest rates at 10 per cent for one year. And this will help millions of Americans save for a home. They have no idea they're paying 28 per cent. They go out there a little late in their payment, and they end up losing their house. It's terrible."

According to a new analysis conducted by the American Bankers' Association, the "10 Percent Credit Card Interest Rate Cap Act" could undermine the affordability of cardholders by limiting credit cards' role as a spending tool. Also, the customers could face tighter credit standards, reduced rewards, lower credit limits, and higher fees.

Based on the Association's data collected from December 5 to January 16, the analysis found that at least 137 million cardholders and up to 159 million would no longer be able to use their cards. Moreover, 74 per cent-85 per cent of open credit card accounts nationwide would be closed or have their credit lines drastically reduced.

"This new data is clear: interest rate caps lead to fewer options, higher costs and reduced access-especially for those who can least afford to lose their credit card." ABA President and CEO Rob Nichols commented. "We urge the administration and Congress to carefully consider the significant harm a rate cap would have on U.S. households and the broader economy. This is not the solution to the affordability challenge."

If an interest cap is imposed, customers with credit scores below 740, who make up approximately 88 per cent of credit card holders, could face account closure or restrictions, as per banking industry trade group The Electronic Payments Coalition.

On the other side, a researcher who studied Trump's proposal revealed that capping the credit card rates at 10 per cent could effectively save around $100 billion in interest per year. They added that while the proposed move could significantly impact the credit card industry, it could still remain profitable in the long run.

So far, the credit card interest capping remains only a proposal. Without legal backing or support from credit card companies, it is yet to be seen how President Trump would implement the move.